OPERATIONAL SERVICE AGREEMENT
THIS ("Agreement") is made as of the __ day of ____, 2007 (the
"Effective Date"), by and between Nationwide Fund Management LLC, a Delaware
limited liability company ("Nationwide"), and ________________________, a
[ ][corporation] ("Fund Provider") having its principal place of business at
____________________________. Nationwide and Fund Provider are each a "Party"
and collectively "Parties."
W I T N E S S E T H :
WHEREAS, The Parties desire to have shares of certain registered
open-end investment companies as listed in Appendix A attached hereto and as may
be amended from time to time (the "Fund" and collectively, the "Funds") included
among the underlying fund investment options available for investment by certain
open-end investment companies for which an affiliate of Nationwide serves as
investment adviser (each a "Nationwide Fund"), each with proposed holdings in
several underlying mutual funds ("Underlying Funds") at target asset allocations
specified by Nationwide;
WHEREAS, Nationwide has retained BISYS Fund Services, Inc. or other
service provider ("Service Provider"), to submit transaction requests to Fund
Provider for the Nationwide Funds;
WHEREAS, The Parties intend that Nationwide will establish individual
accounts ("Accounts") reflecting all transactions by or on behalf of a
Nationwide Fund, which may result in purchases or redemptions by Nationwide of
shares of a Fund; and
WHEREAS, Nationwide and Fund Provider desire to facilitate the purchase
and redemption of shares of the Funds for the Nationwide Funds subject to the
terms and conditions of each applicable Fund's then current prospectus and
statement of additional information ("Prospectus"), and subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree and
declare as follows:
ARTICLE I - PRICING SERVICES AND TRANSACTIONAL GUIDELINES
Section 1.1. CALCULATION BY NATIONWIDE OF NATIONWIDE FUND NET ASSET
VALUE. Fund Provider acknowledges that, in accordance with this Agreement: (a)
Nationwide is responsible for calculating each Nationwide Fund's net asset value
each business day that the New York Stock Exchange ("NYSE") is open for trading
("Business Day"); and (b) Nationwide will calculate each Nationwide Fund's net
asset value based upon, and reflective of, the following: (1) the net asset
value per share of each Underlying Fund as of the market close on that Business
Day; (2) the investment/divestment of all activity of the Nationwide Fund; (3)
the deduction and/or payment of fees and expenses from the Nationwide Fund; (4)
the reinvestment of any income, dividends and/or capital gain distributions
being paid by an Underlying Fund. Fund
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Provider agrees to reinvest, as purchases of additional shares thereof, any
income, dividends and/or capital gain distributions from the Fund.
Section 1.2. PROVISION OF DATA BY FUND PROVIDER.
(a) FUND INFORMATION. In support of Nationwide's obligations
as described in Section 1.1, Fund Provider shall provide all
information and data related to each Fund, as the Parties shall
mutually agree, at the reasonable request of Nationwide. Fund Provider
agrees to provide Nationwide, no later than two (2) hours after Market
Close, with the net asset value per share of each Fund as calculated in
accordance with its Prospectus. "Market Close" means the time each
Business Day that the NYSE closes regular trading. Fund Provider shall
provide such information and data by email and/or facsimile as the
Parties shall mutually agree. Fund Provider shall also transmit to
Nationwide or its designee, by means of email and/or facsimile,
dividend and capital gains information for the Fund as early as
possible, but in any event no later than two (2) hours after the Market
Close, on the applicable ex-dividend date. Fund Provider shall use its
best efforts to ensure that all information and data transmitted under
this Section 1.2 are accurate and complete when provided by Fund
Provider hereunder.
(b) ACCOUNT DATA. Without limiting Section 1.2(a), Fund
Provider agrees to provide Nationwide with access to the following data
to allow for daily reconciliation between Nationwide and each Fund at
the account level (the "Account Data"): (1) the Nationwide Fund's share
position in the Fund; (2) the Nationwide Fund's account balance in the
Fund; (3) any pending trades of the Nationwide Fund in the Fund; and
(4) the previous Business Day's settled trades. Fund Provider shall, on
each Business Day, make available the previous Business Day's Account
Data in such manner as the Parties shall mutually agree.
(c) ACCRUALS. In the event that a Fund accrues dividends on a
daily basis, and the Fund distributes those dividends on the last
Business Day of every month, Fund Provider shall provide the following
data by the following times: (1) the daily net accrual rate for the
Fund by 6:00 p.m. Eastern time on each Business Day; (2) the reinvest
amount for the Fund by 6:00 p.m. Eastern time on the first Business Day
that follows the last Business Day of each calendar month; and (3)
details regarding the accrual methodology applied by Fund Provider,
including whether such methodology includes any weekend income, if
assets earn on the day of deposit and/or the day of withdrawal, and how
accruals are applied when the last Business Day of a month is not the
last calendar day of the month.
(d) ALTERNATE CONTACTS. Each Party shall provide the other
with the names and contact information of appropriate personnel that
either Party may contact in order to identify, address or resolve any
problem or issue regarding any topic addressed in this Article I.
Either Party shall promptly notify the other Party should such
personnel or contact information change.
Section 1.3. DELAYS. In the event that Fund Provider fails to provide
Nationwide with any information and data specified in Section 1.2 by the times
specified therein (each a "Delay"),
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then Nationwide may use any publicly available information that Nationwide
reasonably believes is accurate to fulfill its obligations hereunder, and
Nationwide will correct its records to reflect the timely received information
(provided Fund Provider provides it promptly).
Section 1.4. SCHEDULES IN ADVANCE. Upon request, Fund Provider agrees
to provide Nationwide with the distribution calendar for each Fund. Estimates of
the dividend amounts will be provided when available, generally five days in
advance of such distribution.
Section 1.5. BUSINESS CONTINUITY. Each Party hereby represents,
warrants and covenants that it has and shall maintain a disaster recovery and
business continuation plan reasonably designed to enable such Party to provide
the services described herein and that it shall test the operability of such
plan at least once every 12 months and revise such plan as necessary to ensure
continued operability.
Section 1.6. NATIONWIDE FUND TRANSACTIONAL GUIDELINES. The Parties
agree to follow the guidelines and provisions of this Section 1.6 in processing
transactions with regard to the Nationwide Fund.
(a) TRANSMISSION OF ORDERS. Nationwide shall calculate the
purchase, exchange or redemption order for each Fund share for all
purchase, exchange, and redemption instructions received by Nationwide
from the applicable Nationwide Fund in proper form at or before the
Market Close on each Business Day ("Instructions"). Orders for the
purchase, exchange and redemption of Fund shares from Nationwide that
are derived from Instructions received by Nationwide prior to the
Market Close on any given Business Day must be transmitted to Fund
Provider via NSCC Fund/SERV or facsimile by 9:00 a.m. Eastern Time on
the Business Day next following the Business Day on which such
Instructions were received by Nationwide. Subject to Nationwide's
compliance with the foregoing provisions, Nationwide shall be
considered Fund Provider's agent for the limited purposes described
herein and the Business Day on which Instructions were received by
Nationwide prior to the Market Close shall be the date as of which Fund
shares are deemed purchased, exchanged or redeemed pursuant to such
Instructions. In the event Nationwide orders that are derived from
Instructions received by Nationwide at or before the Market Close on a
Business Day are transmitted to Fund Provider after the deadline set
forth above in this Section, the Business Day next succeeding the
Business Day on which Nationwide received such Instructions shall be
the date as of which Fund Shares are deemed purchased, exchanged or
redeemed. Nationwide orders that are derived from Instructions received
by Nationwide after the Market Close on a Business Day shall receive
the net asset value that is calculated for the Business Day next
succeeding the Business Day on which Nationwide received such
Instructions from the Nationwide Fund provided such Nationwide orders
are transmitted to Fund Provider by the applicable deadline for such
next succeeding Business Day. Each Fund also reserves the right to
delay any such redemption or exchange transaction if it determines that
processing such transaction would be disadvantageous to existing
shareholders. Dividends and capital gains distributions shall be
automatically reinvested in Fund shares at net asset value in
accordance with each Fund's Prospectus.
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(b) WIRING OF FUNDS FOR UNDERLYING FUND REDEMPTIONS. In the
case of any order resulting in a redemption from a Fund (each an
"Underlying Fund Redemption"), Fund Provider shall use its best efforts
to remit or cause to be remitted to Nationwide the exact amount of
funds required to cover such Underlying Fund Redemption by federal
funds wire ("Redemption Wire") by 6:00 p.m. Eastern time on the
Business Day following the Trade Date ("Settlement Date"). If Fund
Provider becomes aware that Nationwide may not receive the Redemption
Wire by 6:00 p.m. Eastern time on the Settlement Date, Fund Provider
shall promptly inform Nationwide of the facts and circumstances thereof
and shall cooperate with Nationwide with the goal of Nationwide
receiving such Redemption Wire proceeds as soon as reasonably possible.
If despite Fund Provider's best efforts Nationwide does not receive any
Redemption Wire by 6:00 p.m. Eastern time on the Settlement Date and
incurs any cost, damage or expense as a result, the Parties will
discuss in good faith whether Fund Provider shall reimburse Nationwide
for such cost, damage or expense.
(c) MISTAKES-OF-FACT AND ADJUSTMENTS. In the event that Fund
Provider causes an error (other than a Pricing Error, as defined
below), delay or other mistake of fact that results in a loss to a
Nationwide Fund (a "Mistake-of-Fact"), Fund Provider shall make any
adjustments on its accounting system necessary to correct such
Mistake-of-Fact and shall reimburse Nationwide, and/or the Nationwide
Fund as appropriate, for any losses or reasonable costs incurred as a
direct result of Fund Provider' Mistake-of-Fact. In the event that
Nationwide or Service Provider causes an error, delay or other mistake
of fact that results in a loss to a Fund, Nationwide shall make any
adjustments on its accounting system necessary to correct such error,
delay, or mistake of fact and shall reimburse the Fund as appropriate,
for any losses or reasonable costs incurred as a direct result of
Nationwide or Service Provider's error, delay or other mistake of fact.
(d) PRICING ERRORS. In the event of an error in the
computation of any net asset value per share for a Fund which, in
accordance with procedures adopted by the Fund's board of directors
(which procedures currently are consistent with views expressed by the
staff of the Securities and Exchange Commission regarding appropriate
error correction standards), as shall be in effect or amended from time
to time, requires adjustment to (1) the Nationwide Fund assets or any
Nationwide Fund net asset value, or (2) transactions previously
effected on behalf of the Nationwide Fund (a "Pricing Error"), Fund
Provider shall notify Nationwide as soon as possible after discovery of
the Pricing Error. Such notification may be oral, but shall be
confirmed promptly in writing. In the event of any Pricing Error, Fund
Provider shall promptly (not to exceed five (5) Business Days later)
reimburse the affected Nationwide Fund for any loss or reprocessing
costs resulting therefrom. It shall be the responsibility of Nationwide
to allocate such credited amounts appropriately among individual
accounts.
(e) UNDERLYING FUND REDEMPTION NOTICE. Except as necessary to
reduce its ownership interest in a Fund under section 5.1(d), or
section 4.3, Nationwide agrees to provide Fund Provider with at least
two (2) business days' prior notice as to any request for redemption or
exchange of shares owned by a Nationwide Fund in any Fund that exceeds
$500,000, provided that Nationwide knows or reasonably should be
expected to know of any such redemption or exchange two (2) business
days in advance of any such redemption
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or exchange request. Fund Provider agrees to waive any fees or
restrictions associated with redemption transactions in accordance with
the terms of the Funds' prospectus. Fund Provider shall provide Plan
Agent with reasonable advance notice in the event a Fund's prospectus
should become inconsistent with anything stated within this Agreement.
Section 1.7. RECORDS AND RECONCILIATION. Each Party shall maintain
appropriate records with regard to its activities and obligations hereunder in
accordance with applicable law, including with regard to shares of the Funds
purchased and redeemed under this Agreement.
Section 1.8. OMNIBUS ACCOUNTS. Fund Provider shall establish an omnibus
account or accounts on its fund shareholder accounting system to reflect each
Nationwide Fund's ownership of shares of each Fund and all transactions by the
Nationwide Funds involving such shares.
ARTICLE II - FUND COMMUNICATIONS
Section 2.1. PERFORMANCE INFORMATION. Fund Provider shall use best
efforts to timely provide to Nationwide each calendar month, investment
performance information for the Funds as of the end of the preceding calendar
month, including each Fund's (1) total return for the preceding calendar month,
rolling calendar three month, calendar twelve month, calendar year-to-date, and
(2) the three-year return (cumulative and annualized), five-year return
(cumulative and annualized), ten-year return (cumulative and annualized), and
since inception (cumulative and annualized) return. Fund Provider agrees to
supply Nationwide with any information which may have or explain a significant
impact on the performance of the Fund in the same manner and time frame in which
such information is made available to shareholders of that Fund
Section 2.2. COMMUNICATION REGARDING THE FUNDS. With regard to calls to
Nationwide which are answered by Nationwide, Nationwide and its affiliates may
provide information concerning the Funds, provided it is disclosed to such
callers that purchases in a Nationwide Fund do not represent purchases directly
into the Fund and that the characteristics of the applicable Nationwide Fund may
therefore differ from the characteristics of the Fund.
ARTICLE III - LIABILITY AND INDEMNIFICATION
Section 3.1. INDEMNIFICATION OF PARTIES. Nationwide agrees it will be
liable to, and will defend, indemnify and hold harmless Fund Provider and the
Funds their officers, directors, trustees, or employees (collectively, the "Fund
Provider Indemnitees") for, all costs, claims, damages, liabilities, penalties,
demands and expenses (including, without limitation, reasonable attorneys' fees)
(collectively "Losses"), suffered or incurred or sustained by the Fund Provider
Indemnitees or to which the Fund Provider Indemnitees become subject, to the
extent such Losses arise from: (1) a material breach by Nationwide of any of its
obligations hereunder or any representation, warranty or covenant made by it in
this Agreement, or (2) Nationwide's gross negligence, bad faith, or willful
misconduct (i) in the performance of its duties and obligations under this
Agreement, or (ii) otherwise relating to this Agreement. Fund Provider agrees it
will be liable to, and will defend, indemnify and hold harmless Nationwide, the
Nationwide Funds and their respective Trustees and officers (collectively, the
"Nationwide Indemnitees") for all
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Losses suffered or incurred or sustained by the Nationwide Indemnitees
or to which any or all of the Nationwide Indemnitees becomes subject,
to the extent such Losses arise from (1) a material breach by any Fund
Provider Party of any of its obligations hereunder or any
representation, warranty or covenant made by it in this Agreement, or
(2) any Fund Provider Party's gross negligence, bad faith, or willful
misconduct (i) in the performance of its duties and obligations under
this Agreement, or (ii) otherwise relating to this Agreement.
ARTICLE IV - TERM AND TERMINATION
Section 4.1. TERMINATION. The term of this Agreement shall begin on the
Effective Date and shall continue until terminated in accordance with this
Article IV.
Section 4.2. IMMEDIATE TERMINATION. Without limiting the foregoing,
this Agreement may be terminated immediately (1) by a Party upon written notice
to the other Party if as a result of regulatory action, (2) by a Party upon a
material breach by any other Party of any provision in this Agreement that
remains uncured thirty (30) days' after the other Party's receipt of notice of
such material breach from such Party, (3) upon 30 days' written notice from
Nationwide to the Fund Provider Parties, or (4) upon 30 days written notice by
any Fund Provider Party to Nationwide.
Section 4.3 DIVESTMENT OF FUNDS DUE TO TERMINATION. No later than sixty
(60) days after the termination of this Agreement the Nationwide Fund will
divest itself of all shares it holds in any of Funds
Section 4.4. SURVIVAL OF PROVISIONS. Notwithstanding any other
provision of this Article IV to the contrary, the provisions of this Agreement
set forth in Sections 1.6(e), 1.7, 3.1, 4.3, 5.2 and 5.11, shall survive any
termination of this Agreement.
ARTICLE V - MISCELLANEOUS
Section 5.1. REPRESENTATIONS AND WARRANTIES. Nationwide and the Fund
Provider Parties, respectively, each represent that it has obtained and shall
maintain all authorizations, licenses, qualifications or registrations of any
governmental body required of it in connection with this Agreement and the
registrations are and will remain in full force and effect during the term of
this Agreement.
Nationwide further represents, warrants and covenants to Fund Provider that:
(a) Nationwide has and shall maintain policies and procedures
reasonably designed to deter the Nationwide Funds from engaging in
short-term transactions or arbitrage activity;
(b) Nationwide represents and warrants that it will otherwise
comply with all applicable federal and state laws, regulations, and
rules in connection with this Agreement.
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(c) All activities required to be performed by Nationwide
under this Agreement shall be performed by qualified and appropriately
licensed personnel of Nationwide in accordance with the terms of this
Agreement and the highest industry standards.
(d) With respect to each Nationwide Fund, Nationwide agrees to
implement and maintain policies to ensure that the Nationwide Fund will
not, in the absence of the existence of a fund-of-funds agreement
approved by the board of trustees of the Nationwide Funds and the board
of directors/trustees of a Fund, own 3% or more of the aggregate value
of all shares issued by any Fund. Nationwide shall promptly notify Fund
Provider in the event that any Nationwide Fund owns 3% or more of such
shares, and shall immediately divest itself of any shares necessary to
reduce its outstanding ownership to below 3%. Nationwide agrees to
provide upon request of Fund Provider all information necessary for
Fund Provider to determine the percentage ownership by any Nationwide
Fund of the aggregate value of all shares issued by the Fund. Fund
Provider may request such information no more frequently than once per
quarter. Fund Provider agrees to provide Nationwide on each Business
Day, information regarding the total aggregate value of all shares
issued by any Fund in which a Nationwide Fund invests, in order for
Nationwide to ensure that no Nationwide Fund will own 3% or more of the
outstanding shares of any Fund.
(e) Nationwide represents and warrants that the Nationwide
Funds will endeavor to comply with either (1) the provisions of SEC
Rules 12d1-2 and 12d1-3, as applicable; or (2) all conditions pursuant
to an order of exemption from sections 12(d)(1)(A) and (B) and 17(a) of
the Investment Company Act of 1940, as amended, to which the Nationwide
Funds are subject (Investment Company Act Rel. No. 25492 (notice -
March 21, 2002) and Investment Company Act Rel. No. 25528 (order -
April 16, 2002)), or any amended or successor exemptive order to which
the Nationwide Funds may become subject, and that the Nationwide Funds
have in place appropriate procedures and controls to maintain such
compliance.
Section 5.2. CONFIDENTIALITY. Except as provided elsewhere in this
Agreement, each Party shall treat as confidential any and all information
pertaining to this Agreement (including the Agreement itself), and any actions
of the Parties in respect thereof ("Confidential Information"), except in cases
where such information has been made public by the Party providing such
Confidential Information, or where the disclosure of such information is
required to be made by such Party in accordance with applicable law.
Confidential Information shall not be construed to include information that: (i)
is or becomes a matter of public knowledge through no fault of a Party; (ii) was
in the Party's possession or known by it prior to its receipt from the other
Party; (iii) was rightfully disclosed to the Party by another person not subject
to a confidentiality restriction with respect to such information; or (iv) is
independently developed by the Party without access to information obtained in
connection with its status as a Party.
Section 5.3. NO WAIVER. No act, delay or omission done, suffered or
permitted by any Party or its subsidiaries, affiliates, delegates or assignees
shall be deemed to waive, exhaust or impair any right, remedy or power of such
Party hereunder, or to relieve any other Party from the
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full performance of this Agreement; no waiver by any Party of any right or
remedy under this Agreement shall be deemed to be a waiver of any other or
subsequent right or remedy under this Agreement; and no waiver of any term,
covenant or condition of this Agreement shall be valid unless in writing and
signed by the obligee party.
Section 5.4. GOVERNING LAW. This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania, excluding the laws on conflicts of
laws thereof.
Section 5.5. AMENDMENT. Except as otherwise specifically provided
herein, this Agreement may only be amended by the written consent of all of the
Parties hereto.
Section 5.6. ENTIRE AGREEMENT. This Agreement, including any documents
referenced herein, supersedes any and all prior discussions, written or
oral,
among the Parties hereto relating to the subject matter hereof.
Section 5.7. EXECUTION AND COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
agreement but such counterparts shall together constitute one and the same
instrument. For purposes hereof, a facsimile copy of any of this Agreement,
including the signature pages hereto, shall be deemed an original.
Section 5.8. CAPTIONS. The captions of the section of this Agreement
are included for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise effect their construction or effect.
Section 5.9. FORCE MAJEURE. No Party shall be liable, nor shall any
Party be considered in breach of this Agreement, whether or not due to any
failure or delay in performance of its obligations under this Agreement, as a
result of a cause beyond its reasonable control including but not limited to any
act of God or public enemy, act of any military, civil or regulatory authority,
terrorist act, change in any law or regulation, fire, flood, tornado,
earthquake, storm, or other like event, disruption or outage of computers or
communications, equipment failure, power or other utility failure, labor
strikes, exchange action, which could not have been prevented with reasonable
care.
Section 5.10. SEVERABILITY. Any provision of this Agreement which may
be determined by competent authority to be prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In such case, the
Parties shall in good faith modify or substitute such provision consistent with
the original intent of the Parties.
Section 5.11. NOTICES. Any notice required or to be permitted to be
given by either Party to the other shall be in writing and shall be deemed to
have been given when as follows:
Notice to Nationwide shall be sent to:
Nationwide Fund Management LLC
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0000 Xxxxx Xxxx
Xxxxx 0000 Xxxxxxxxxxxx, XX 00000 Attn:
Notice to Fund Provider shall be sent to:
[ ]
Attn:
Section 5.12. DELEGATION. The Parties hereby expressly agree that each
Fund Provider Party and Nationwide may delegate any or all of its respective
obligations under this Agreement to one or more of its respective affiliates. It
is further understood that Nationwide may appoint Service Provider to perform
certain functions described in this Agreement. No delegation or appointment by
any Party pursuant to this paragraph shall relieve such Party of any of its
responsibilities hereunder, and the Parties shall be responsible for the
performance of any of the services by its delegates or appointees as if no
delegation or appointment had been made.
{Remainder of page intentionally left blank.}
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the Effective Date.
NATIONWIDE FUND MANAGEMENT LLC
By: _______________________________
Name:
Title:
[FUND PROVIDER]
By: _______________________________
Name:
Title:
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APPENDIX A
List of Funds and Share Classes Eligible to Participate in Operational
Service Agreement
A-1
